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Mad Money

News/Business. (2013) New.

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480

TOPIC FREQUENCY

Timken 12, Us 11, Avnet 10, Cramer 9, Apple 7, China 6, Netflix 6, Europe 5, Asia 4, California 3, S&p 3, Washington 3, Scott 3, Florida 3, Humira 3, Virginia 2, Heaven 2, Tkr 2, Dell 2, Ohio 2,
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  CNBC    Mad Money    News/Business.  (2013) New.  

    January 24, 2013
    6:00 - 6:59pm EST  

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i'll find tout question on everyone's mind. it is done going down? don't move. "mad money" is coming up next. time for the final trade. mike coe. >> put spreads traded. i like that. a leveraged bearish spread. >> keith. >> finally looking for shorts where there could be an earnings miss, looking at kimberly clark. >> karen? >> i love the name, but it's hard to say good-bye so you got to sell some realology. >> you have to sell realology. >> yes. >> tempur-pedic, strong options on tpx, it just is filling in the after-hours a big gap it created last year.
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watch that one tomorrow. >> i'm melissa lee. thank you for watching. back here again at 5 for options action followed by money in motion. don't go anywhere. jim's got the ceos of adnet and tim kin. that begins right now. i'm jim cramer. and welcome to my world. you need to get in the game! going out of business and he's nuts! they're nuts! they know nothing! i always like to say there's a bull market somewhere, and i promise -- "mad money," you can't afford to miss it. hey, i'm cramer. welcome to "mad money," welcome to cramerica. other people want to make friends, my job is knot just to entertain you but to teach and coach you, so call me at 1-800-743-cnbc. what the heck is going on around here? how can we hit another five-year high for stocks?
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the general consensus that things aren't so hot. dow gaining 46 points, s&p briefly breaking through the 1,500 level before losing steam in the afternoon. closing ever so slightly in the green while the nasdaq closed, pulled under by the shakespearean tragedy. how can we keep going higher with the disarray in washington? the general sense that the economy's not getting any better. is it? the answer's simple. why you may not think the overall economy is getting better, you're missing the big picture, partner. if you were to ask me to game the market using just one figure, one figure only, it wouldn't be what apple earnings, the gross domestic product, the growth rate of earnings or the dividend yield of the s&p, it would be the weekly jobless claims. the weekly jobless claims is an indicator of future employment in this country. there's absolutely no coincidence that we had five-year highs today in the stock market. at the same time that unemployment claims hit five-year lows.
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it isn't fanciful that the market's roaring because jobs are being created at accelerating pace. it's the most determinant of the stock market. after all, the market got crushed when unemployment went above 5.5% and soared right into the great recession. i think these positive numbers are occurring because of the certainty that comes from putting a presidential election and a tax fight behind us. plus, the warring political parties seem to have -- it does seem like a truce at hand deferring a ridiculous and harmful government shutdown. throwing a huge turn in china that converts believers every day along with stabilization of europe and multinational companies have at last powered higher. all that good news in the jobs it creates are causing a radical revision in what we're willing to pay for future earnings. that's right, the price to earnings multiple, the ratio of how much we'll pay for the profits companies are going to have down the road is headed north and therefore so are the stock prices. we're willing to pay up because of the prospect that things are,
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indeed better. let me show you what i mean. let's take the transports. they've been scorching, scorching despite the index being home, beating down trucking companies, worldwide freight plays, and the railroads -- which were just annihilated by an historic decline in the most important cargo, coal. what's happening now if the economy's getting better for the airlines? the seats are being filled, raising prices. for trucks, there's more commerce domestically, more to ship. the stabilization in europe and the nation is gigantic, every bit as important for united parcel as the huge orders from amazon. and, yes, we're paying more for the rails because we have to believe that coal has bottomed down 19% because electric will rise. meanwhile auto for woods and homes as long as grains, oil all need to be moved to where they're needed. the bottom has been reached, the gross margins can climb because they can be put through, right through along with the larger
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volumes and the stocks go higher. we're seeing the same thing with the industrials. as we know from watching boeing go higher, the best example because the rally is happening despite the dreamliner's many woes. if it can go higher, why can't the industrials not climb? how does caterpillar go higher despite the huge chinese scandal? simple, because we're starting to build things in this country, things that need tractors and the chinese are reaccelerating. they need tractors and engines too. we talked about the growth in heating and air-conditioning. the orders for carrier, the carrier division of united technologies, or the elevator orders for otis. so we pay more for the stocks. in the meantime, we know taxes on our dividends aren't going up. they stayed almost the same. that's a remarkable surprise that nobody talks about. but the need to find higher after tax yields is behind the huge move in the big dividend paying drug stocks.
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it's why we pay more for bristol-myers as we did today or johnson & johnson which kind of hangs in there despite the earnings miss and the horrendous implication of their faulty hip product. it's why we're paying more for the oils, all the oils because more oil will be used when things get better sending the hesses and conocos higher with them. that's how it can be ten points above where it was when it pre-announced a shortfall. and, of course, any uptick in employment has huge implications with autos and for homes where for a couple of years we were building homes at a rate that came in under what we were building when we had half as many people in this country. and it means more businesses for the banks, the processed home loans and that group gets revalued upward. we use more copper, more wood, more fiber, aluminum, glass, paint, tools, when we build more homes and cars and planes, especially when the demand seems to be sustainable and rising. so we keep paying more for the earnings of all the companies
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involved in that complex. yep, we pay more for all of those stocks when the virtues you cycle gets going as it is right now. and remember, employment just turned. that's what we key off of to decide what to pay for future growth. companies will have more demand, higher prices, better gross margins, better than expected earnings and those better than expected earnings are the life blood of this entire magnificent rally. the only area where it gets really confusing is tech. and that's a huge part of the s&p, the biggest, talk about a battleground. what did we pay for apple's earnings now that they're decelerating? do we take money out and buy other technology stocks like intel and microsoft which reported mixed and in line quarter, 76 cents a share, one-cent beat, drop a tad, 1.5% in after hours trading, or do we go by avnet, whole foods, which reported terrific upside surprise today. or do we pile into what we know is growing faster? that stocks that aren't tethered
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to personal computers alone, facebook, amazon, google, and netflix, which rallied more than 40% today. are those four stocks the newest four horseman of tech? placing intel, cisco, microsoft, oracle. are those now our father stocks like merck and pfizer were before them or general motors, bethlehem steel were before those? i would argue kind of, yeah. apple being revalued identically to intel, microsoft and oracle on earnings basis, lower than those. those were once high-growth stocks where the growth has stalled out. their shares traded at a discount. apple in a sad way is a source of funds. it's supplying the fuel for the revaluation higher as it sheds billions of dollars in market cap, money that goes into the other segments of tech and the rest of the market in general. find young stock cannibals. all these revaluations are playing out right now and that's why we're seeing a robust market.
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money coming in from the sidelines, recognizing with washington off the front pages with loan growth picking up and interest rates on bonds, it's time to pay more for stocks. here's the bottom line, this is the kind of super bullish moment we only see once or twice a decade when we decide the old tv show has it back, the prices aren't right, they're raw and they must head higher. almost in lock step to where they really belong. scott in california, scott? hey, scott. >> caller: how you doing, jim? this is scott from studio city in sunny, california. >> loving that. >> caller: boo-yah for ya. >> it's good to have you onboard, what's shaking? >> caller: netflix, yesterday at the close, basically i've been trading the market methodically and it's given me profits, 95% in cash, looking for something to buy, got a little bored, saw netflix, i know -- i know i
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shouldn't chase it being 5% on the day, but i decided to throw money at it and a couple minutes later, i noticed it popped 35%, and i gave you a call because i was wondering what i should do. >> look, i do these videos every day for realmoney.com, and i said if you owned -- if you owned netflix, take a little off the table today. because i don't like parbolic moves, that's up too much. cut it in half tomorrow. cut it in half. the move is too big. let's go to tyler in iowa. tyler? >> caller: boo-yah, jim. lagrand, iowa. my stock is inbn. the consensus after the bell yesterday and had a solid run today. do you think it'll get back to the all-time high of 20, or where do you see it going from here? >> that is a good stock and i think you should hold on to it. it's funny, we looked at this once again. we should look at it again. wow, that has moved a great
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deal. we have to do more work on that. we have to do more work on that. that's a monster move. this is a rare moment in investing. things are improving. don't drive yourself crazy by missing the big picture as employment gets better, stocks go higher. "mad money" will be right back. coming up -- steely resolve? timkin delivered a quarter that pleased this morning. is it the fire you need to heat things up? tonight cramer checks if the stock is on the right track with the exclusive with the ceo. and later, assault on apple. relentless selling drove shares of the former street sweetheart apple down 10% in reaction to their latest earnings report. tonight, cramer's slicing it open and asking the question on everyone's mind, is it done going down? plus -- tech check, apple's sour earnings report kept the nasdaq back while the rest of the market roared. but shares of i.t. supplier
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avnet bucked the trend, surging after reporting. don't miss cramer's exclusive with the ceo as he browses the supermarket of tech for what's working. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.
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never let it be said that america's no longer a manufacturing nation. economies all over the world are doing a whole lot better than they thought they'd be even a month ago. that's why the industrials have been roaring. and here in the united states, we have the best industrial manufacturers on earth barnone. companies like timken, and a major maker of high-engineered
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bearings and alloy steels. i like the stock so much, recently bought it for my charitable trust as we visited them in ohio. you can follow along with that at actionsalertplus.com. timken supplies a host of products on fire right now. all of these are bouncing. and also the rebound courtesy of the turn in china. oil and gas business too. aeros, autos, china, oil and gas renaissance. these are four of my top themes for 2013. and timken's hitting in each of them. back in 2011, 30% of the products, their steel business sold, didn't even exist. that's right, the product lines didn't exist five years before. that's what i mean about this company being an innovator. now, just this morning, timken reported a fabulous quarter, a 16-cent earnings beat off a 6 cent basis and though the revenues fell year-over-year, they came in higher than expected. their response to the stock rally convincingly.
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we last spoke to timken from the floor of their fair crest steel plant when we went to canton, ohio, on october 18th. at the time trading at $39 and change, since then, risen to $53. let's check in with jim griffith, president and ceo of timken, learn more about where the company is headed. mr. griffith, welcome back to "mad money." >> it's great to be with you, jim. >> do you think some of what happened in your stock since we saw each other last, that people believe 2013 will be a better year or the fact that the year did finish pretty strong even if some of the parts, oil and gas, some weren't as robust as we'd like? >> well, i think the market's beginning to recognize that the timken company today is a very different company. 2012 was our second best year structurally in terms of earnings, and as you said, we went through a fourth quarter where our customers were adjusting inventory, our plant utilization went down to 50%.
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and yet we delivered a good quarter. and i think that recognition is getting through to the market. >> well, i think this is really important because i've studied this for a long time, visited bethlehem steel a bunch of times. once they went below 90%, okay, 90% of their factories being used, this stock's plummeted. how is the steel company able to make this much money at 50%? >> well, i think the answer is you said in your introduction, we aren't a steel company. we're a knowledge company that goes to the market. we create unique value whether it's with products for our customers and then we translate that on a platform of excellent execution. and that combination gives us better earning power. >> now, i did find versus when we talked to each other last, i read through the lines of this excellent conference call. and i see asia turn. that's -- that to me is just unassailable at this point. >> we are seeing a change in
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asia, significant change. we're beginning to see the order books fill. we actually had a good booking month in december, in january. so we are beginning to see it particularly in china where the actions of the new government are starting to come through and translate into orders for us. >> well, i think that's very, very big. because i know when we saw each other, you described how many people you have working in china, right? >> yeah, we have about 4,000 people in china, which is our investment in the 21st century of demand, getting into the fastest growing markets of the world where they are building infrastructure and that infrastructure's being built around timken products. >> now, also, when we were there, i felt remiss. you do well in this country in part because you do have a great source of energy, right? american energy is playing right into timken's hands. >> well, in the united states, we have a good energy supply, but more than that, the change in the energy markets is creating a great opportunity for us.
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the growth of a domestic natural gas market -- drilling market, domestic fraccing market is creating a great opportunity for timken products. and that's part of what's driving our profitability. >> now, after i saw you and spent some time in your plant and with your terrific people. i came to understand that timken, sorry for using this word, but it's a wholistic experience. doing a lot of terrific products and there's some guy who buys a lot of stock and says we ought to break up timken, tell me if you think i'm wrong, but i think that the parts are actually augmented by the whole, not worth more than the whole. >> yeah, there's no question about that. we leverage the synergies between all parts of our business to create value. in fact, just this quarter, we started delivering on a major contract with one of the transplants where we're selling steel, but we're selling it in the form of a preformed product for one of their transmission plants because we're taking the capabilities from our bearing
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business and applying them to the technologies in our steel business. >> and also, just the way you brought the bearing business point-blank. one thing that never wavered here, aerospace is really good for you, isn't it? >> our aerospace business has turned nicely. in our aerospace business it's only about 50% bearings. we've gone well beyond bearings into services and, in fact, into making complete transmissions for some of the military helicopters. and that market is actually a positive market for us despite what you hear from washington. >> one last thing, i'm trying to understand where we might get a trough in trucking. because trucks are very important for timken. we are beginning to see truck orders troughing in asia. will you see a trough in trucking in 2013? >> again, as you look at the truck market specifically, you've got to look at it on a global basis. and the european truck market is already at relatively low
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levels, the u.s. truck market is at relatively low levels. asia, it's beginning to strengthen in some places. there's a chinese truck market, a domestic truck market has is transforming to world standards and we have a large position in india. so overall, that's a reasonable market for us. it's down in the fourth quarter of 2012. it will start 2013. relatively slow, but in the long-term, we think that's a very positive market for us. >> i want to congratulate you, jim, for both the great technology that you employ and the fact that the old days steel companies would go under in this country at that level of utilization. when things get better, your numbers will be magnificent. jim griffith, president and ceo of tkr, thank you so much for coming on the show, sir. >> jim, thanks for inviting me to be with you. >> guys, this is everything we want out of this country, out of the people who work in this country. and these guys have really got it going now. i can tell you from someone who studied the steel industry for many, many years. these companies used to not
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survive in this level of operation. it's going to be amazing. tkr, stay with us, stay with cramer. coming up -- assault on apple. relentless selling drove shares of the former sweetheart down 10% in reaction to the latest earnings report. tonight, cramer's slicing it open and asking the question on everyone's mind, is it done going down? what are you doing?
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what can i say about apple? of all the things that went wrong with that lackluster quarter yesterday, worst of all, by far was last night's imperious condescending conference call. the stock got hit with a host of downgrades and price cuts on its way to a 63-point comedown, in large part because the call explained nothing about what's really going on. some companies just don't want to do the call. they don't want to waste their time, be constrained by those wall street analysts who spend all their time building models rather than sleek, elegant, beloved machines. they don't have to defend themselves or their actions to these analysts or make the case for their stock in the face of queries from lesser minds. in short, they don't want to have to justify anything they've done beyond simply informing these overpaid jack ls. these companies believe in the
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form of wall street guidance. the thing speaks for itself. i don't blame anyone, any management feels this way. going through these conference calls is not unlike wasting solid time at the dmv to get a new driver's license. perhaps visiting customs in some god forsaken banana republic where you have to play along to get the heck out of there. it is better than a colonoscopy. but it's part of the process. the acknowledged price you have to pay in order to get people to recommend your stock. it's what i call the cost of sponsorship. the process of promoting something you might very well think is unseemly or unnecessary, your company's stock price. they do it the best they can. try not to be too petulant or angry or condescending or too dismissive, but for some, that can be a very, very tall order. and this is what apple's ceo tim cook and his team are suffering through right now. they're trying hard to figure out why they have to deal with
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this substrata of specimens known as wall street analysts, fila, nemitodes. that corrosive but never to be admitted undercurrent. of course, that wasn't so hot, or the over/under ordering of supply parts iff for the ipad mini, some would call it arrogance, admitting that apple thinks it doesn't have to play ball beyond the basic information it feels the need to give out. the subtext being, if you don't like our answers, figure it out yourselves. good luck because we'll fire any supplier that will help you try to do it. others would say this attitude is about trying to prevent anyone from piercing the veil, the veil that says, look, we make the best products in the world. and everyone knows it. and if we could make more of what we like, everyone would buy it and we could charge whatever we like and we'd still do great! so go stick in that earnings
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model of yours in your pipe and smoke it. all of this is totally realistic from apple's point of view because of the past. it even works if the real subject that the analyst cover is the quality and degree of love for the products you make not some feckless piece of paper that trades on some exchange, nasty, dirty thing. but it's thorny and uncomfortable. if the real issue is the trajectory of the stock price. it has the audacity to represent the company value, downright horrendous. when that's in a tail spin and management doesn't want to dignify why that might be or how it could be stopped, perhaps this is because the guys at apple don't even care. i don't know. worse, maybe it's because they think the analysts trying to set the price are so obtuse like the warden in shawshank that it isn't worth working with them to help them. almost as if you can hear the top brass saying, quote, if only we could take these numbers and
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statistics right to the people instead of having to deal with the stooges, end quote. that's how they can brush off questions about market share or pricing, actual demand. it's just pedestrian from knaves who wouldn't know the difference between a sleek mac, lamborgh i lamborghini. but there's a gigantic elephant in the room and that's the stock price. it will not be ignored. apple seems to believe the stock is not obeying the will of the satisfied customer or hearing the charms of the management or marching to the tune of the most innovation, the ipad mini. unfortunately the stock is now reacting to the litany of mundane inputs which have trapped the stocks of other companies. competition from other companies, gross margins, something made by a samsung, for heaven sake. i thought they were like a steel company. the stock is reacting to how much money is being made on each item.
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the dreaded nitpick of gross margins. that nasty number that inferiors, competitors are suddenly making superior product at least in the mind of some of the less savvy consumers out there, the superior. what must be going to apple is the fact these analysts actually think they need ammo to stay positive, ammo to do something as simple as breathing, which is to reiterate the buy ratings. i can see tim cook turning to his colleagues puzzled saying, it's as if we have to come up with something breakthrough, something dazzling for them beyond what's obvious. which is how great we are. but at some point, your company's products may face genuine competition. in many places on earth, other companies may be taking share, which is what's happening with that samsung phone. or you might have product lines in decline like the iphone. like the ipad. and it's a funny thing, when that happens, you actually do need to give these analysts
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something juicy, a morsel. the result, the flood is unleashed and you get the wholesale alienation of the lap dogs who cover the stock. it was like when the wicked witch of the west melted and all the guards rejoiced. now, if apple were private, winky guards rejoiced. nobody would care if this company were private, if the stock's value were equal to the cash, who would need the cash, the gremlins? which brings me to the second big issue, in the wake of the disappointing quarter, how are we supposed to value apple stock now? do you slap a multiple of eight times earnings on it where it's
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currently trading? valuing the stock at 9.5% growth? do you draw the line in the sand with slightly lower growth rates? that's where apple used to trade before the stock started peaking. those days are gone. i see three ways the stock could go. go higher. i've got some solutions. i don't want it lower, my charitable trust owns it for heaven sake. if apple would start an aggressive buyback, something like $137 billion in cash, they could shrink the share count and get a higher multiple. it could dramatically boost the dividend to give you real yield support if you think either of these things will happen, then this stock is buy right here, right now. it could make a terrific acquisition, more on that later which could really send it flying. without a massive dividend boost and monster buyback not like the current effort or a deal for something that makes the company more social to reanimate the stock, apple's caught in this brutal process of going from a
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growth stock to a value stock. it has to overshoot to the downside where it should be, which is what's happening right now to get to the point where it should bottom. you can't rocket higher anymore because the animal spirits, they're gone. if any stock is due for a bounce, it's this one. here's the bottom line, apple's management needs to realize what everyone else has, that it's a regular public company especially since the death of the founder steve jobs. and until it either stops being public or trades to cash, management will have to do a better job of explaining itself. and if they care about the share price at all, apple needs to hit shareholders with a deal, a massive buyback or dividend boost. that's why it's worth holding. they've got to do that stat. otherwise, my prediction a la another one-time crowd pleaser, mr. t. is pain. let's go to brian in maryland. please, brian? >> caller: boo-yah, jim, from baltimore nation. ravens country. >> oh, man, good to have you onboard. you know i'm thinking of
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harbaugh will win this weekend. >> caller: i think a harbaugh will win. >> i don't like to narrow it beyond that. go. >> caller: jim, my question's in regard to the transforming tv market. with the inevitability of technologies like google fiber and the itv by apple, the new investment opportunities within the space of traditional content providers. >> right. >> caller: and also relatively new internet content providers such as netflix. >> uh-huh. well, look, netflix went up too much today. but netflix is good, by the way. netflix is good because it's growing subscribers. time warner has been a favorite of mine. i think it's terrific, it's cheap. and, you know, look, i work for comcast, so it's like, you know, i can't tell you it's good, but i do love the cable business very, very much. i want to go to david in virginia. dafd? david? >> caller: hi, jim, and a big
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baltimore ravens boo-yah from northern virginia. >> redskins boo-yah, rg3 means nothing to you, boo-yah. just because your team isn't in, you don't adopt a new team. >> caller: that's okay, rg3's on the sidelines for now, but we hope gets better. >> dr. james andrews is in the huddle. what's up? >> caller: thanks for your books and show, jim, i've become a much better home gamer with your assistance. i've don my acquisition homework on this one, but i have a couple of items i'd like to share. >> okay. >> caller: my stock is a large i.t. services provider with global exposure. computer sciences corporation. >> always a bridesmaid, never a bride partner. >> caller: csc. last quarter blew away the expectations. current estimates appear conservative. they have a strong turn around ceo with their change in march of 2012. a "mad money" interview with him would be great. their balance is improving,
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growth is solid, exposure to the defense industry could be a problem, though. >> yes. that's what -- dave, that's what i was going to tell you, is listen, it's got too much defense. but you know what we're going to do? we'll do a full work-up of csc, it's a very inexpensive stock and if it has earnings momentum, that could couple with the takeover potential. i like this idea, you obviously know it real cold, i'm going to get on it myself. memo to apple, okay, do something with that mountain of cash, something. give us something, otherwise they're going to come back, they're not with the surrendered dorothy group anymore. you're sitting on a lot of cash. i want a deal, a buyback, a dividend boost. otherwise, yeah -- don't move, "lightning round" next.
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it is time, it's time for the "lightning round" on cramer's "mad money." rapid-fire calls. you say the name of the stock, i tell you to buy or sell. are you ready? time for the "lightning round" on cramer's "mad money." max? >> caller: boo-yah, baby. >> boo-yah back.
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>> caller: research in motion. rimm. i'm not against it, i'm going to say 15, you want to pull the trigger because it will be perfect there. let's go to -- good, let's go to john in florida. john? >> caller: hey, jim, greetings from florida. my question is net suite, i got in at 23. >> i do like these plays, i like salesforce.com more than that one. jeannie in california. >> caller: i need a sweater for winter, ati -- >> no, the downgrades are so powerful, i have to believe there's something wrong with stainless steel. let's go to john in illinois. john? >> caller: boo-yah, jim, thanks for taking my call. calling about rlgy, realogy. >> okay, that is the best real estate play i know that is not linked to actual housing, and i want to own the stock. i hope it pulls back, but it doesn't, realogy's good. gary in south carolina, gary? >> caller: jim, congratulations on your super show. >> thank you.
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>> caller: my stock is mattell. >> hate to buy a stock at a 52-week high, but if it falls under 35, you want to own it. joe in florida. joe? >> caller: hey, jim, thanks for taking my call. jcp, jc penney bondholders, is bankruptcy on the horizon? >> the preferred hangs in there. the preferred hangs in there. i don't want to own the stock. i need a reason to own the stock besides the fact it might not go bankrupt. and that, ladies and gentlemen, is the conclusion of the "lightning round." >> the "lightning round" is sponsored by td ameritrade. of w. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade.
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i've always said if you want to take the temperature of the entire tech sector, then the best thermometer is avnet. i like to think of it as the largest super market of technology on earth. the largest distributor of electronics and information technology hardware, over 100,000 customers. when they have come out this morning and shoots the lights out with a spectacular quarter, that's a big deal, especially since a few short months ago, the hardware side of the tech business was in bad shape. yet today, avnet delivered an 18
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cents earnings beat while the revenues up very slightly came in substantially better than expected. company pretty darn bullish guidance for the next quarter too. the strength was in north america where avnet sales were up from the prior quarter and europe, the middle east, and africa, which was up a staggering 52%. stock of course immediately soared $2.23 more than 6.9% today in response. avnet's 21-cent gain since we told you to buy the stock. let's talk to the ceo of avnet who told us last time the stock was too darn cheap. find out about the quarter and what it means for the industry. welcome back to "mad money." >> appreciate it. glad to be back. >> the first thing people said to me when this number came out other than thank you for telling me to buy it. now, he was on october 26th. how can things snap back? what happened in the country? what happened in the world? what went on that six weeks later things were better? >> jim, i'm not sure i can
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explain the whole world picture, but i can tell you about our business here. if you remember that october interview that september quarter, we talked about the cautious tone from our customers both on the component side of our business. we set expectations below normal seasonal guidance out of respect for that environment. and what really happened, the sequential story is very, very strong. the numbers you talked about included some m&a, but we were ahead of normal expectations, particularly on you are i.t. business. and what i would tell you is there was certainly a factor of that delay and deferral we talked about in september that actually came in strong in december. >> well, look, you go over the conference calls pretty extraordinary. you talk about europe. you say a lot of it's eastern europe, uk and germany. i mean, there has been weak demand for two years, but demand grew 20%? how is that possible? >> no, it was aided by a
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acquisition we closed early in the quarter overall. what i would tell you is on an organic basis, our european computer business is still down double digits year-on-year, though. >> that's fair, but you did say positive things about how this month's going. for your company and also that inventory's low, which i think is a great tell of 2013. >> well, we were very proud of the cash flow for the quarter and, of course, the reduction on inventory contributed that overall. as i said, jim, i couldn't be prouder of the team. the way they've responded, we always ask them to do the right things over time. and in addition to adjusting our expenses, which we talked about on that october call, we also look at that working capital. so to be able to absorb and be able to support this upside growth in revenues, dropped through leverage on the bottom line and still work on that working capital. it's still making sure we're in a position to service those customers as they expect from avnet, could not be prouder of the overall job the team has been doing. >> when you were on, you had said, look, the stock got to the
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high 30s, it wasn't the right level to buy. when you came back on, you said, listen, now our stock is cheap. and, sure enough, i have you buying 2 1/2 million at $28 during this quarter. >> that's right. >> you had faith the company would come back even though the order book wasn't there. you knew the company had an innate strength you had to take advantage of as a cash flow man. >> we felt we had -- we were a compelling investment value, and jim, out of the 750 of total authorization and buyback that we've authorized since august of '11, we've spent about $525 million of that, 225 still dry powder, but we've acquired that as you said at about an aggregate of $28 a share. and that looks like a good investment right now. >> look, a company could be a customer, it's another company, but apple was down really big today. and i know a lot of people are asking me, look, avnet can snap back. can every company in technology
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snap back? >> well, our exposure, remember, is in that broad industrial customer base. and for the last couple of quarters, while apple was doing so well, we looked like we were a little out of sync in those particular quarters and perhaps now as the more of the digital consumer products have a little bit more of a letdown and more competition there, we're trying to make sure we understand what's going on with that broad base of industrial customers that we service and our guidance would suggest there we had a positive book to build and components off the december quarter and we don't want to overplay that into a big call. because there are still major questions on our mind about the overall macroeconomic situation we're dealing with. but we don't want to at the same time, we don't want to down play the fact there were some encouraging signs out of the second quarter in addition to the headline results. >> one last line, our america's region, which grew pro forma revenues 36%, sequentially well above seasonable growth as our data suggests many other products delayed at the end of september were completed in the december quarter. what would have been delayed at
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the end of september that got completed in the december quarter? >> jim, our thesis is pretty much built on the premise that a lot of those i.t. budgets get reset at the end of the calendar year. in other words, you're a cio, you're talking with your ceo, you decide to defer in september and let it slip into december. if you don't spend it in december, you might not have the budget in january. so part of our thesis is that as opposed to deferring in september, december may have been more a little bit of influence of use it or lose it mentality that helped contribute to the big sequential increase that we saw. >> well, they certainly spent on you and you spent and buying the stock and did a terrific job. congratulations, the ceo of avnet, great to speak with you. >> some companies know their own business, and their own stock, and avnet is one. what a great opportunity to buy at $28 when he told you you should, you should because he was buying it for the company himself. "mad money's" back.
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my birthday's coming up in a couple of weeks, and my youngest daughter she wants ideas, lists, she's really into giving the right presents and, of course, receiving them. so when she asked me what i wanted, i told her i wanted the first season's dvd of sons of anarc anarchy. everyone tells me it's like hamlet. second of all in to steven king.
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she texts me back immediately. we ceased to communicate by actual speech a long time ago, but i believe i would recognize her voice if she called. she text me back, she isn't going to buy me the dvds because it streams on netflix. memo from me to you. any time whatsoever a teenager is worried about spending your money, sit up and take notice. my daughter swears by netflix, even more than apple. i should have figured that after all that they gain all these new -- it mean, have you bought a new television? even the most dubious quality television, they come with netflix right on the clicker. no wonder they rallied huge, up more than $43, 42%, especially when you consider the company on the conference call ruled out an equity offering to pay for that new content. the short sellers were hoping it would go down, they would do an underwriting, be a big dip, forget about it. it's not going to happen. my daughter's the one who told me she's been buying things off of facebook lately. she nabbed an rhcp t-shirt.
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it is the red hot chili peppers. when zuckerberg said the company screwed up mobile and is now getting it right. she's the one that turned man e to apple years ago at $50 because she wanted the second ipod. as a fashion accessory. but alas, she and her sister are the reason i had to cool on apple recently because they didn't want any of the new stuff and angry about the cord and the maps app and the new itunes. her sister wanted to know if twitter was public because she loves that, i don't know if she follows me @jimcramer. which brings me to the take away here. right now, there are companies that have no appeal at all to the younger generation. we saw with coach and tiffany the other day, two older brands my kids aren't interested in, my daughter has a retro coach bag. no more interested than they'd be in shopping at jc penney,
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driving a gm car. yet, if you're going to win the younger generation and you must because it's a generation that will soon have the purchasing power, a generation that is much smarter than we are, you need to talk to kids like my kids. and they now think that apple's old. not repulsive like a hewlett-packard, not repugnant like a dell, just old. that could change on a dime. all apple would have to do is go buy twitter or netflix or linkedn is developing quite a following among people joining the workforce. they could buy all three and get their mojo back because that would be putting them in touch with what younger people want. netflix knows the younger generation better than most people think. apple used to know. they used to know. now netflix, they know binge viewing. nonappointment tv and shows like "arrested development" which is one of the reasons netflix can soar 43% on a 13-cent profit and plummet on a gain. it's a lesson that apple better pay attention to if it ever wants to get back in touch with
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the next generation and what they truly want. even as it seems they're more sure than ever of their hip status. stay with cramer. ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn.
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